Another one bites the dust: last week the publisher of Reader’s Digest, filed for bankruptcy, joining a long list of media outlets battered by the recession and an ineffective ad-supported revenue model. The struggling industry is ripe for a new business model.

On the heels of the Reader’s Digest announcement comes news from Journalism Online LLC, a new venture spearheading journalism’s transition to a paid online model. Publishers representing more than 506 newspapers and magazines will join JOL as affiliates. Their goal? To generate new revenues from readers and distributors for their digital content.

JOL’s co-founder Gordon Crovitz, who for over a decade ran the Wall Street Journal Online, explains:

“Every publisher we have met with is now seeking to generate revenues for online access, which is a huge shift in strategy. The interest shown by our affiliates and many other publishers with whom we are intensely engaged confirms the need for a sophisticated commerce platform to meet the challenges facing the media industry.”

We at Zuora believe that subscriptions might just save the publishing industry. Earlier this year, we blogged about how subscription revenue models are taking center stage, and noted that News Corp Chairman Rupert Murdoch hinted at moving toward paid content. This month, when Murdoch announced plans to roll out paid content on all News Corp websites, we highlighted the power of subscriptions at Zuora customer GigaOM Network, which successfully launched a premium content service for its annual subscribers this year.

Although the publishing industry seems to be coming around to the idea of paid content, the information-must-be-free crowd stands its ground. Nearly 300,000 Facebook users have joined the group to “Keep Facebook Free,” with the threat of signing off the site.

Paid content providers will have to find a way to differentiate themselves in order to justify the premium. In his new book, Free: The Future of Radical Price, Chris Anderson argues that the most effective price is no price at all. He highlights how savvy businesses use “freemium” business models to get subscribers to pay for premium features, like Flickr does with its Flickr Pro account. The Wall Street Journal is a great example of a successful “freemium” business model in journalism. Paying subscribers can read The Wall Street Journal online, with navigation. Non-subscribers have to settle for reading the occasional Wall Street Journal story when they happen to encounter it—indexed in Google, or referenced from another site.

We’re excited to see the publishing industry rally around subscriptions to overcome its challenges. Despite the naysayers, we’re on board with JOL’s subscription model for content, and we’re thrilled to see more supporters join the ranks.